Some leads just aren’t worth your time
A major potato chip brand’s advertising used to dare viewers to stop at just one chip. That’s impossible. Nobody has the self-restraint to resist grabbing a second chip. Or a third.
That’s how most HVAC and other home service businesses are when it comes to leads. No matter how many they already have, they crave more of them. That craving is so strong that they’ll pour big dollars into lead-generation machines. More leads means bigger revenues, right?
Not necessarily. If those owners take a closer look at all those leads, they’re going to notice something disturbing. We’re pretty confident they’ll discover that their techs come away from half of their customer appointments with zero revenue. Our experience says that’s the case among the more successful contractors. The percentage is even lower for the average crowd. What’s yours?
The problem isn’t the number of leads you receive. It’s that you’re sending people out on the wrong calls. Sometimes, it’s a matter of sending the wrong person for the particular type of customer. Sometimes you’ll just waste a tech’s valuable and limited time by pursuing the lead.
Booking by opportunity
You can approach leads as a numbers game — which most of your competitors do — or you can shift your marketing mindset and begin booking by opportunity. If your staff is at a comfortable size and you’re getting enough leads and work to keep them relatively busy, the next step is to put more thought into how you choose the opportunities you’ll pursue.
Most contractors imagine that all leads offer the same opportunities to capture profitable business. Contractors who think that way tend to book every lead they can without considering the likelihood the call will generate sufficient revenue. When their tech pulls up to the Smith home, they don’t know whether they’ll find a year-old heat pump that’s still under warranty or a 20-year-old furnace that won’t make it through another season.
Just basic economics
The older the customer’s equipment is, the more likely it will present a true opportunity for revenue, right? That’s absolutely true. What’s also true is that your techs have the capacity to handle a set number of calls each week, so it’s to your advantage to fill those slots with customers offering the greatest potential for revenue.
If a caller is having an issue with equipment that’s less than five years old, it’s not as likely to generate as much revenue as equipment that’s over a decade old. That’s why you want to fill your appointment schedules with calls involving older equipment. Those are the customers who are most likely to spend a significant amount of money, so you want to do everything you can to respond to their needs immediately.
What about the callers with new equipment? If you happen to have extra spaces in your appointment calendar, you can slot them in. It might take a little longer to get to their homes, but that’s okay, because it’s less likely to be worth your tech’s limited time. And if a caller with minimal opportunities for profitability decides to turn to a competitor who can get to them more quickly, don’t be upset, because the competitor probably isn’t going to make anything.
How it works
Let’s look at a contractor named George who employs six techs. He knows each needs to receive three leads a day to meet basic goals. That’s a total of 18 leads per day or 90 a week. Based on experience, George knows that maybe 40 of those calls are unlikely to produce any revenue, because the customer’s equipment is too new to have serious issues. About 30 of the calls will be to homeowners with equipment that’s 5-10 years old, generating an average ticket of $1,000. What about the remaining 20? Those are the folks whose equipment is older than 10 years, generating sales of $5,000 or so each. That’s $130,000 in expected revenue right there.
If George focuses on scheduling calls to maximize revenue instead of simply trying to handle as many calls as possible, his business becomes significantly more profitable. If he gave that group of 20 first priority and managed to cover the other 30 before the week is out, his expected revenue will be $130,000. If he can’t get to the other 40, that’s okay, because they’re not likely to produce any revenue.
George can also match the right tech to each call. He’ll send the guy who does the best job of selling to customers with the oldest equipment, because they’re most likely to need a replacement. He’ll send his newest (and lowest-paid) techs to the calls with less potential for profit.
There’s another piece
So how does George know which customers are the better targets? His CSRs (customer service representatives) are the key. During that first conversation with the customer, they ask about the age and condition of the customer’s equipment and listen for insights to help them choose and prepare the tech.
No, that doesn’t happen immediately. It demands a serious investment in training. But we have to wonder what it would mean to your bottom line if you could shrink your percentage of zero-revenue calls by half or more.
If you’d like to know more about Cornerstone, and how we work as your outsourced marketing department to help grow your business, contact kerryf@cornerstonead.com. Or you can call (317) 804-5640 x108.